Harmonized Consumer Price Index (HICP)
The CPI is an index designed to measure the change in price of a fixed
market basket of goods and services. The market basket of goods and
services is representative of the purchases of a typical consumer. Most
countries have an alternate measure of inflation where they exclude
volatile items, such as food and energy, to arrive at a measure of
underlying inflation. Colloquially, this is usually referred to as
“core” inflation. Core inflation can be a useful analytical tool.
Many Central banks explicitly target inflation levels. An acceleration
or deceleration of inflation may signal that a change in monetary policy
might be appropriate.